Key Forces of EasyJet Competitiveness - Essay Example

?Competitive Force Analysis: The case of EasyJet The airline industry is highly competitive. Its success and performance is dependent on a number of environmental forces and variables. The factors that may influence this competitive environment where EasyJet is working involve political, social, economic and financial issues like war, security, inflation, oil prices, GDP and so on. They key forces that influence the performance and operations of EasyJet in the competitive environment include suppliers, competitors, distributors and customers. All these key forces play a vital role in the strategic decision making and plans for the business. Suppliers: Suppliers play a major role in any business. The suppliers provide the right product, material or service on the right time. Suppliers in the airline industry need to be accurate and specific on the products and services required. The airlines which are already developed and working in the industry like Easyjet have relatively more power on the suppliers. However, the most critical supplies like the oil prices are highly depended on the cost which is determined by the political and economical issues prevalent in the country. Hence, the airlines and specifically Easyjet does not have any control over such supplies and their costs. Boeing and Airbus are the major suppliers of aircrafts in the industry up till now. This concentrated number of manufacturers gives the suppliers more power over the airline industry. Airbus and Boeing are the major suppliers of commercial planes in the industry. EasyJet is running the airline business using a single kind of aircraft. This factor limits its power over the suppliers as the prospects of high profits and sales from Easyjet are limited for the suppliers. However, if EasyJet moves towards expanding its operations and overall business expansion, it may have higher bargaining power over the supplies and services from the suppliers. EasyJet is also dependent on the suppliers for the spare parts and the limited number of suppliers poses a threat to the operations of airline business if EasyJet gets into a dispute or any uncalled event occurs with its chosen supplier. The major competitors of EasyJet include Ryanair, BMIbaby, Mytravellite and buzz in England. The possible competitors in the future involve Virgin express, Hapag Lloyd express, Germanwings and Air Berlin. The threat of substitutes is low due to the competitive advantage of timeliness and quick service of the airline industry. However, the existing competitors like RyanAir, are posing a threat to the success of EasyJet by offering discounts to increase sales, providing better and more comfortable services and so on. These competitors play a major role in deciding the future sales, business growth and decisions of the EasyJet. A change in the price or nature of services of one airline business places a burden on the other to provide equal or competing options to attract customers. Hence the analysis of competitors, their strategies, cost cutting ways and factors increasing sales are of paramount importance for EasyJet (Mayer 2003, pp. 9-11). Distributors of EasyJet mainly consist of Internet Booking System and Telephone reservation Systems. These two modes of distribution are easy, user-friendly and flexible for the customers. These modes can be accessed anywhere and with minimal time to process their request. These distribution modes are technologically equipped and hence less chance of error or frauds are present. Since 90 percent of EasyJet’s sales is acquired through internet Booking systems, the business is highly dependent on it. This distribution channel may harm the business’s reputation if some error occurs within the electronic processing of requests. It is however justifiable to believe that these distributors of EasyJet’s services play a major role in the company’s cost-effective plans (Mayer 2003, pp. 9-11). EasyJet offers low cost airline services to its customers. The customers who opt for such low cost services are more price conscious. The low cost services provided by the businesses which are operating in the airline industry make it more complicated to attract and retain the customers. The customers have other low cost alternative services which give them a stronger bargaining position. Customers have technologically advanced systems working in the industry which make it easier for them to compare the prices and go for the best suitable airline for their journey. The businesses are hence, required to update their price, service, discounts and package details (like holiday packages, return tickets packages etc.) on their websites on a regular basis to retain and attract customers. EasyJet follows a customer oriented approach owing to the overwhelming increase in buyers’ power. This is the reason why customers’ like to travel with EasyJet. The plan of EasyJet is to attain customer loyalty by providing customers with what they expect and need. Branding is the concept which deals with understanding and analyzing customers’ demands and needs and finding the best ways to communicate the business’s skill and power to provide services for those needs using the resources that a business has and strategic decisions it may make. EasyJet has been successful in adopting and implementing this approach by practically providing customers the benefits that they require. Hence, we may say that EasyJet is somehow successful in building stronger relationships with the customers and attaining customer loyalty (Frangos 2009, pp. 562-568). However, the low cost airlines are charged with the claim that they place too much burden on the customers when charging on baggage or from cards for payment. The add on baggage charges are so commonly used that Nils Pratley (2011) writes that “it is showing up in the line easyJet calls "ancillary revenues”. On the other hand, the charges when paying by debit/credit card are also a matter of debate. Brignall (2011) reveals that “the cost to the airline would be around 20p to process a debit card payment and no more than 2% of the transaction value for a credit card.” The family of four will be charged with “?38 by Flybe and ?5.50 by easyJetfor paying for return flights by card. In comparison, Easyjet is cheaper when it comes to card charges still they are higher than the actual charges imposed. In short, we may say that, however, there are a number of forces which are directly affecting the performance and decision of EayJet, it is still successful in maintaining its performance in the industry. EasyJet is successfully meeting the criteria of customers in meeting their demands and struggling to achieve power over suppliers in order to have a more stable position in the business industry. Bibliography Frangos, C. (2009). Proceedings of the 2nd International Conference: Quantitative and Qualitative Methodologies in the Economic and Administrative Sciences. Greece: Technological Educational Institute of Athens. p562-68. Mayer, F. (2003). A Case Study of EasyJet and the Airline Industry. Germany: Grin Verlag. p8-11. Pratley, N. (2011). Passengers' pocket power. Available: http://www.guardian.co.uk/business/2011/jan/20/viewpoint-easyjet. Last accessed 8th Mar 2011. Brignall, M. (2011). Airlines accused of forcing passengers to pay 'excessive' card charges. Available: http://www.guardian.co.uk/business/2011/feb/11/which-consumers-card-charges-ryanair-easyjet. Last accessed 8th Mar 2011. Read More